INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

SCHEDULE 2A  

Calculating car expense deductions

TABLE OF DIVISIONS

1	Overview of the main points in this Schedule
2	Choosing which method to use
3	The ``cents per kilometre'' method
4	The ``12% of original value'' method
5	The ``one-third of actual expenses'' method
6	The ``log book'' method
7	Keeping a log book
8	Odometer records for a period
9	Retaining the log book and odometer records
10	Situations where you don't need to use one of the 4 methods
11	Definitions of ``car'', ``car expense'', ``holding a car'' and ``owning a car''

Division 6 - The ``log book'' method  

SECTION 6-2   HOW TO CALCULATE YOUR DEDUCTION  

6-2(1)   [Business use percentage]  

To use the ``log book'' method, you multiply the amount of each car expense by the business use percentage.

6-2(2)   The expense.  

The expense must qualify as a deduction under some provision of this Act outside this Schedule (or would qualify if, while you held the car, you had used it only in producing your assessable income). If only part of the expense would qualify, you multiply that part by the business use percentage.

Example:

You borrow money to buy a car. You make repayments of principal and payments of interest.

You cannot deduct the repayments of principal because they are capital expenses.

The interest payments would be deductible in full if, throughout the income year, you had used the car only in producing your assessable income.

Using the ``log book'' method:

• if you held the car for the whole income year - multiply the interest payments by the business use percentage;

• if you held the car for only 6 months of the income year - multiply the interest payments for those 6 months by the business use percentage.

6-2(3)   The percentage.  

The business use percentage is calculated by dividing:

• the number of business kilometres that the car travelled in the period when you held it during the income year;

by

• the total number of kilometres that the car travelled in that period;

and expressing the result as a percentage.

Note: For the definition of ``holding a car'' see section 11-3 .

6-2(4)   [Definition of business kilometres]  

Business kilometres are kilometres the car travelled in the course of producing your assessable income.

6-2(5)   [Calculation of business kilometres]  

You calculate the number of business kilometres by making a reasonable estimate. The estimate must take into account all relevant matters, including:

(a) any log books, odometer records or other records you have; and

(b) any variations in the pattern of use of the car; and

(c) any changes in the number of cars you used in the course of producing your assessable income.